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Grab the opportunity to offload Air-India

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Industry leader Ratan Tata today expressed interest in the possibility of privatisation of Air India, saying he would be very happy to look at it whenever it happened. "As an when it happens, we would be very happy to look at it," the Chairman Emeritus of the Tata Group said when asked whether he would be interested if Air India was privatised. Tata's comments came weeks after Civil Aviation Minister Ajit Singh said it was his personal opinion that the government should not be in service sectors like airlines or hotels and any future regime could consider privatisation of Air India, as the government would not give any more funds to the airline after it completed equity infusion of Rs 30,000 crore till 2021. Tata was speaking to reporters after he, along with Singapore Airlines CEO Goh Choon Phong and Tata-SIA Airlines Chairman Prasad Menon, met the minister. Air India was formed as a division of Tata Sons Ltd (now Tata Group). It was being run as Tata Airlines till 1946, after which it became a public limited company.

For the full report in the ToI, click here

The question all along has been which is more irredeemable - KingFisher, or Air-India? In such a scenario, TATA offering to take over Air-India should be seen as a God-sent opportunity for the country to unburden itself of the mammoth white elephant, or rather a money-swalloing dinosaur. Now is the time, since once Ratan Tata loses his say in the Tata empire, which time is not too far to go, decisions will be based on hard realities and not on sentiments, and then the chances of TATA's retaining their interest in the proposal are rather remote.

The question as to whether the political parties support this or not should perhaps be part of their manifesto in the upcoming elections. Well, the stand of the Congress, whose incumbent government, which, on the other hand, is talking of imposing MTNL/ BSNL on the babu's, in addition to Air-India (check this), can only be on the expected lines. What about the BJP, whose PM nominee has all along been talking the "less government, more governance" language? Also, what about AAP, whose spokesperson had clearly stated that they stand for privatisation? - check this.

Muralidhar Rao


murali772's picture

Ideal opportunity

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Even as Air-India has been regularly in the news all for the wrong reasons, whether on the quality of milk served (check this), fuselage panel falling off from Boeing's Dreamliner flight (check this), and the latest being skidding off the Jaipur runway, due to tyre-burst (check this), apparently, it is still seen by our countrymen as the most trusted airline, if one were to accept the assessment by "Economic Times - Brand Equity" (check this).

But, the very big problem is that it is losing a huge lot of money, which the country just cannot afford. The fact is also that the country does not quite need its services any longer, with the civil aviation sector having quite matured, even otherwise. Propitiously, there's a suitor (Rata Tata) waiting in the wings to buy it over, largely for sentimental reasons, which position will not last for too long. As such, citing the award, for whatever it's worth, why not strike a bargain with him, and sell it off, when the going is still not too bad?

It's the best win-win possible, for everyone concerned.

Muralidhar Rao
murali772's picture

albatross around the country's neck

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A senior Air India commander has been found teaching trainee pilots how to fly the Airbus A-330 for years - without being certified as an instructor-examiner by the directorate general of civil aviation (DGCA)! He unauthorizedly took simulator classes and performed route checks on real flights.

The downgraded aviation regulator discovered this fact recently. Joint DGCA Lalit Gupta on Monday ordered a probe into this serious safety oversight and suspended the 'Munnabhai' trainer's pilot licence which means he can't even fly a plane. Now a serious question mark hangs on the fate of the trainee pilots who were taught to fly the A-330 by this commander.

"The fact that this commander was not authorised by DGCA to be an instructor-examiner on the A-330 was known in the airline. Still, the narrow body operations department (A-330 were part of erstwhile Indian Airlines and flown by IA pilots) allowed this commander to train others. It smells of a larger thing than just a pilot hiding his credentials and wrongly coaching trainees," said a source. The airline management had recently changed the airline's ED operations, removing the director under whose watch this unauthorized training took place.

For the full report in the ToI, click here.

No day passes without some scam or the other surfacing about Air-India, each possibly leaving its impact on the only remaining suitor, Ratan Bhai. More and more the chances are that it will remain the albatross around the country's neck.

Muralidhar Rao
murali772's picture

real big ticket test for the government

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A news agency reported that the government was considering setting up a panel, which would include representation from the finance ministry, the civil aviation ministry, the Cabinet secretariat and the airline, to consider selling 49 per cent stake in Air India to meet its revenue target from state asset sales next financial year. However, officials denied this, saying the airline was in the midst of a turnaround and any talk about privatisation and stake sale would be useful only when it started making profit. The ministry also denied any proposal to offer its equity in Air India to banks in a debt-swap agreement. "No such move," Civil Aviation Secretary R N Choubey said, in a text message.

A committee headed by Rakesh Mohan, former deputy governor of the Reserve Bank of India, had recommended earlier that the government reduce its stake in AI to 26 per cent over five years.

For the full text (emphasis added by me) of the report in the Business Standard, click here.

Finally, there's at least the talk of privatisation, meaning that the government has finally acknowledged that it needn't be in this business. But, the 'pundits' seem to suggest that it can happen only after a turnaround. But, once that happens (which in itself is going to be a big ask), the unionists will bring in the talk of selling away the "family silver", and the pundits too will endorse that. All in all, it's plainly a game to retain the status quo to perpetuate various vested interests.

The government needs to boldly move on the Rakesh Mohan committee recommendations, and reduce its stake to 26%, and the move towards achieving that objective needs to start right away. This, if you ask me, is the real big ticket test for the NaMo government.

Muralidhar Rao
murali772's picture

rather ambitious!

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Switching into expansion mode, the Air India Group has decided to add 100 planes to its current fleet of 132 in the next four years. All airlines within the group — parent AI, AI Express and Alliance Air — will get more aircraft under the plan. This time the airline will opt for leasing, unlike the 111-aircraft order of UPA-I when planes were bought.

"By March 31, 2020, AI group will have 232 planes. While nine aircraft (six Boeing 787s and three B-777) are from the previous order (of 111 planes), the rest will be new orders for leasing planes. We are going to grow aggressively and fight for leadership across segments," AI chairman Ashwani Lohani told TOI.

- - - Air India chief Ashwani Lohani had recently told AI employees in a letter that the Maharaja's "survival will remain at stake" till it is able to cover the annual debt servicing cost of Rs 4,000 crore. "This (operating profit) is just the first milestone and the airline still has a long way to go to meet its total costs.... The target for full turnaround is FY 2018-19, maybe a year earlier and till then our financial position shall continue to remain tight," he said in the letter to employees. AI has loans of Rs 48,400 crore.

For the full text of the report in the ToI, click here.

Rather ambitious. If Air-India can actually be turned around in the face of the stiff competition all around (on a level playing field - one is not sure about that!), that'll be some achievement.

Muralidhar Rao
murali772's picture

waiting to become the worst?

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Following are the excerpts from a report in the Khaleej Times, under the caption "Air India bags third spot in world's worst performing airlines" (to read the full text, click here).

The aviation insights company FlightStats has released a list of the international airlines with the best on-time performance records. And the losers. The company tracks delay and cancellation patterns for airlines across the globe, as reported by Bloomberg.
Worst three:
3. Air India - 38.71 per cent
2. Icelandair - 41.05 per cent
1. El Al - 56 per cent

Best three:
3. JAL - 12.2 per cent
2. Iberia - 11.82 per cent
1. KLM - 11.47 per cent

- - - Jim Hetzel, Vice President of Aviation and Distribution at FlightStats, was quoted as saying, "Compiling the list is no small feat. We stitch data together from 500 different sources. Among those sources are flight-tracking and positional services, airport runway times, radar services, airline records, airport data, and such governing bodies as Eurocontrol and the Federal Aviation Administration. All of these pieces come in in different formats, all with different elements of value, and a lot of times the sources don't agree. We've built the technology and logic to sort that out and validate information across multiple sources. It's a pretty interesting process."

So, it's a fairly thorough exercise, compared to those where "namma" BMTC and KSRTC regularly get rated the best in the country (check here), for all that we know about them (check here).

Very clearly, the public sector work culture is just not suited to providing services (and neither for producing goods), and it's high time the government stopped burdening them on the tax paying public.

Muralidhar Rao
murali772's picture

tiny ticket privatisation not good enough

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To call Air India the national carrier, and so justify running it at losses that would make Vijay Mallya’s Kingfisher blush, is a tragi-comedy that must end.

- - - If Air India staff strike to protest attempted privatization, the public will not suffer at all—other airlines will easily pick up the slack. That shows how irrelevant Air India has become for travelers, even as it becomes an ever-thirstier bloodsucker of public funds and bank borrowings diverted from public health, housing and poverty reduction.

Earlier this month, the Cabinet Committee on Economic Affairs decided to privatise three hotels. A press release said “running and managing hotels on professional lines is not the work of the government or its entities”. Surely the same is true of running airlines.

- - - The only way out is privatisation. The government must recast Air India financially to make it auctionable at a decent price. The government can retain a 26% minority share for strategic reasons as well as to profit from rising shareholder value after successful privatization. The political and economic conditions will never be better. After winning the UP and Delhi municipal elections handsomely, Narendra Modi has the political capital to bite the bullet.

For the full text (emphasis added by me) of the blog by S A Aiyer in the STOI, click here.

Can't have put it as well as Mr Aiyer has done. When you once again hear of some talk of privatisation (hotels here), you tend to think - ah, finally, it's happening! But, again, unless the big ticket Air-India kind of privatisation happens, the government will continue to be seen as guilty of diverting funds away from areas that affect large sections of have-nots critically.

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